[Desk Column] Why Supply Measures Are Perceived as 'Land Grabbing'

Jeong Duhwan, Head of Construction and Real Estate Department

Five years ago in 2016, a bill to abolish the Land Development Promotion Act (Taekchok Act) was proposed in the National Assembly. It was a member-initiated legislation requested by the Ministry of Land, Infrastructure and Transport, the competent authority. The bill was based on the premise that compulsory land expropriation for public interest excessively infringes on individuals' private property rights, representing an outdated system. Ultimately, the abolition bill was shelved due to concerns that the disappearance of a large-scale housing supply method could potentially fuel housing prices.

The enactment of the Taekchok Act in 1980 marked a turning point that revolutionized the housing supply system. Until then, public land development mainly relied on land readjustment projects using the land-for-land exchange method. Since a significant portion of the developed land was returned to the original landowners, there were limitations to large-scale supply. The Taekchok Act resolved this issue at once. By building houses on forcibly expropriated land and releasing them directly to the market, it became possible to supply a large volume of housing in a short period.

The Taekchok Act demonstrated its power like a trump card during every surge in housing prices. Thanks to this law, the Roh Tae-woo administration in the late 1980s was able to roll out the first phase of new towns, totaling 300,000 households, to curb soaring housing prices. The second phase of new towns under the Roh Moo-hyun administration and the third phase under the current government were also possible because of this law.

Although five years have passed since the controversy over abolishing the Taekchok Act, the majority of experts agree that compulsory land expropriation for large-scale housing supply and housing price stabilization is inevitable. While concerns about infringement on private property rights exist, the public benefits gained through this process are considered far greater.

However, the government’s recently announced ‘2·4 Supply Plan’ has reignited debates surrounding the infringement of private property rights. This is because there is a strong intention to expand compulsory expropriation development not only in the public sector but also into the private sector.

Let’s take a closer look at the newly introduced ‘Public Direct Maintenance Project.’ Under this project, the required resident consent rate is lowered from three-quarters to two-thirds. This means that even if three out of ten residents oppose the project, compulsory expropriation of land and buildings is possible. Compared to the existing redevelopment’s right-to-sell exercise condition, which requires securing over 95% of land ownership, the power of compulsory expropriation becomes clearer. Although the goal is to increase insufficient housing supply for the public good, the expansion of this into the private sector is causing growing backlash over excessive infringement on private property rights.

Another policy in the same vein is the plan to provide cash compensation instead of housing occupancy rights to homebuyers after the announcement date, even before the designation of ‘Maintenance Project Planned Districts.’ The government insists this is “fair compensation” amid ongoing controversies. But is that really the case?

Full ownership rights are guaranteed only when exclusive rights over use, profit, and disposal are protected throughout the entire process. People who bought homes without knowing whether their area would be subject to the public direct maintenance project face eviction from their residences, threatening housing stability itself. This constitutes an infringement on usage rights. The same applies to those who owned homes in the area before the announcement. Due to fears of cash compensation, they find themselves unable to sell their homes even if they want to. This is an infringement on disposal rights.

The government justifies the various threats to private property rights embedded in this plan by claiming, as always, that “the public benefits gained through this outweigh the harms.” However, it deliberately ignores the constitutional principle that “infringement of private property rights for public interest must be minimized.”